JOHANNESBURG (miningweekly.com) – London- and Johannesburg-listed gold and platinum junior Pan African Resources is talking to the Chinese and others on the potential development of its large greenfield gold projects in the Evander area.

New Pan African CEO Ron Holding said at question time after the company’s presentation of solid results that the company had been to China since revealing its intention to attract Chinese investment in its Rolspruit, Poplar and Evander South gold projects.

“We have also been talking to others,” Holding said, adding that he could not offer anything definitive on the China trip at this stage, except that the company was in discussion with numerous parties.

He made the point that, in the current depressed gold market, it was better for Pan African to advance these projects from their prefeasibility stage to bankable stage, "where we add a bit of value and then have a better product to sell out into the market”.

Earlier, Holding, who is backed by new FD Cobus Loots, formerly of Shanduka Gold, which holds 23.9% of the shares of Pan African, said the company would be seeking an investor in its ultra-deep Rolspruit project at Evander, which was down to 3 000 m and which would require an additional decline to 3 500 m.

“It’s a very good orebody,” Holding said of the extension of the current Eight Shaft orebody, which has an in-stope grade of some 14.5 g/t.

Mining consultancy SRK has been tasked with undertaking an analysis to advance both the Evander South and Poplar projects from their current prefeasibility stage to full feasibility.

“We’ve had the first feedback session with SRK and in the next six months we’ll take the matter further,” Holding said.

The company has given notice that it will be in the low-grade cycle of Evander’s Eight Shaft for the next 18 months.

Eight Shaft mines the Kinross pay channel, which has an extremely rich 15 g/t centre, but the mining focus well into the next financial year will be on its lower grade extremities.

Incremental ounces are, meanwhile, being targeted at Seven Shaft and surface sources are being extended for production before year-end.

A prefeasibility study is under way on the Evander Tailings Retreatment Plant and a reopening of the No 3 decline section to access the 2010 pay channel is planned.

In the 12 months to June 30, gold sold increased by 38.2% to 130 493 oz from 94 449 oz last year and gross revenue increased by 49% to R1.8-billion compared with R1.2-billion last year.

With a current capacity to produce at a rate of 200 000 oz a year, the company is targeting an output of 250 000 oz in the next 18 months.

Pan African has increased earnings with a proposed dividend and a solid performance from the Barberton operations.

A dividend of 13c a share was declared with an announced practice, going forward, of all spare cash going to shareholders.

The company, which will pay out R250-million in dividends, did not declare a dividend in the previous financial year.

Earnings before interest, tax, depreciation and amortisation increased by 33% to R735-million, well up from R552-million last year.

In the 12 months to end June, actual earnings rose 35% to R487-million (2012 R359-million).

Earnings per share increased 39% to 34.51c compared with 24.83c last year.

Net debt of R93.6-million at year-end compared with net cash of R255.5-million in 2012 and there is an undrawn revolving credit facility balance of R434.8-million.

Gold resource inventory increased by 494% to 35-million ounces, well up from the 5.9-million of last year.

Capital expenditure incurred on sustaining and expansion capital amounted to R381.6-million, up on the previous year’s R213.9-million.

Two employees were killed at Barberton Mines, marring the group’s improved safety statistics at both underground operations.

Pan African has been running Evander, which it bought from Harmony Gold for R1.3-billion for seven months, the transaction having been funded by combination of a rights issue, revolving credit drawdown and own cash.

Evander gold sold in the four months reported was 34 197oz.

The platinum tailings operations of Phoenix Platinum managed to wash it own face financially in producing 6 480 oz of platinum group metals at a basket price of  R9 093/oz, up on the previous R7 499/oz.

The company is keen to do more in platinum, where its cost an ounce of production decreased 3.8% to R7 550/oz.

The first gold pour has taken place at the Barberton Tailings Retreatment Plant, where the company spent R229-million capital, funded internally from cash generated by Barberton Mines.

The group’s current tax charge increased marginally by 5.4% to R167-million, with the capital spent on the Barberton Tailings Retreatment Plant fully tax deductible, resulting in the effective current tax rate decreasing to 22.2%.

Phoenix Platinum has unredeemed capital expenditure of R133-million, which will be used in the future.

Although cash decreased to R71.6 million owing to funding of both Evander acquisition and the Barberton retreatment plant, the company was still able to generate sufficient cash flows from operations to fund on-mine capital expenditure and R184-million in debt repayments during the year.